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President Barack Obama (Image credit: Getty Images via @daylife)

The President claims that income inequality is fraying our social fabric. In truth, it is government policies, especially our economic policies, which are tearing us apart. One such culprit is our federal income tax system, which in some sense pits the portion of society that doesn't pay income taxes against those that do.

Meanwhile, our overall economic policies have an economy that should be roaring, limping. In the absence of growth, people are turning to politicians far more versed in political laws than economic laws. Many of those politicians are eager to divide the American economic pie rather than grow it – all of which leads to division among Americans.

The economic figures America faces today are depressingly stark. A record number of people are dependent on government – that includes record numbers of people on food stamps and an astonishing number of people on disability. Nearly one in seven Americans are on food stamps – that’s over 23 million households. The cost of that program has doubled under Obama. As for disability, the new welfare magnet, 11 million Americans receive assistance through that program.

Soon, Americans will have a new government-sponsored affront to basic economics called Obamacare. Under that program, this President will perpetuate the myth that there is a free lunch – at least for some. Detroit, which offered government benefits it couldn’t afford, is eager to take Obama up on his Obamacare free lunch offer. They are seeking to push off their unfunded medical pension benefits into that federal program as an indirect bailout.

As for the overall economy, growth rates under Obama’s so-called recovery are at historic lows. Despite unprecedented amounts of deficit spending, a gross abuse of Keynes’ theory of priming the pump and final proof of its failure as a long-term policy, we have had growth rates of less than 2%. Our labor force participation rate is at a record low for this point in a recovery and the number of part-time workers is rising.

According to the AP, “Four out of five U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.” Further evidence of that is that home ownership is at a 20-year low.

Our economic predicament is not an accident or a mere coincidence. Our growth rates are low because the burdens on doing business in America are at an all-time high. Keep in mind that the laws of economics do not change – at least while our DNA remains largely the same. People react just as they did in the past to incentives and to the massive disincentives of today.

Other economies are growing at a higher rate because of their policy choices. Our economy will continue to limp along as long as we have record debt, record high regulations, and the tax structures of today matched with the threat of more government tomorrow.

As to our social fabric, consider how our stagnant economy and those policies divide us. If a rising number of individuals aren't suffering the pain of the income tax, then by definition our system is promoting societal division. In recent years, that division has become more and more public and is encouraged by this President’s class warfare and his phony talk about income inequality. Keep in mind that the income inequality statistics on which he relies include comparisons between the income of 23-year-olds and 53-year-olds. Does anyone really think a 23-year-old fresh out of college should make the same as someone who has worked for 30 years on his or her career? Those so-called inequality statistics also fail to distinguish between those who have obtained advance degrees and those who did not. Should their pay be equal, too? To all but the most committed proponents of division, the answer is no.

Beyond the income tax, our government is picking an ever-greater number of winners and losers. Obama promotes Solyndra, and many similar companies, over other companies. To be sure, other Presidents and countless members of Congress have done the same, but not anywhere near the current degree.

The point is that each time government makes a choice, it necessarily divides those seeking the benefits against each other, and both of them against the taxpayers forced to pay it. Doling out nearly $4 trillion a year in spoils means our federal government is creating countless divisions.

On an even broader level, the more complex the laws under which we live (and now struggle), the more they benefit the rich at the expense of the less-rich. The rich, whether corporations or individuals, can afford to pay for political access and for the lawyers and accountants necessary to make government work for them. Meanwhile, everyone else is rightfully resentful of their access to government. By creating a complex system of government, our government promotes yet more division among Americans.

Our government-induced stagnant economy divides us as well. In response to bad job numbers and the like, politicians rush to create programs to help their perceived constituents. That process means that, yet again, Peter has to pay for Paul (dividing them), and Paul is now in a dire competition with millions of others for government benefits. A stagnant economy also makes it far more difficult for those at the lower end of the economic spectrum to climb the ladder because there are less opportunities out there.

Government divides us in many other ways as well: blue states against red states, public employee unions against the public they were meant to serve, public pensioners versus non-pensioners and now the young against the old under Obamacare, as premiums forced upon the young will be used to subsidize their elders. The list could go on and on. Suffice it to say that the more government does, the more it divides.

This problem of division can only be unwound by reducing the number of winners and losers government picks, by changing our taxing schemes and, most importantly, by growing the economy. Not coincidentally, all three of those can work hand-in-hand at the same time.

By reducing the activity of government, we can reduce government-sponsored social competition for spoils at the same time we relieve the burden on taxpayers. A flat tax would greatly reduce social competition because it would reduce class envy, improve the economy and result in more tax revenues. Ending the income tax in favor of a consumption tax would be even better because all Americans would know at point of purchase the cost of government, not to mention that they could starve it when it's acting badly. Further, if Obama really cared about our fraying social fabric, he would care most about growing the economy. Employed people are happy people eager to work with others.

In the final analysis, politicians making too many choices necessarily divide Americans. Their bad laws distort and drag down our economy, resulting in lost jobs. Rather than divide us further with ever more laws and programs, it’s time our leaders realized two important conclusions: 1) that the power to tax necessarily involves the power to divide, and 2) that government programs divide us far more than they unite us. They also need to finally recognize that President Reagan comment remains ever more correct when he stated that “the best social program is a job.” I am certain Reagan would also agree that jobs would divide us less than government.